Some editor emeritus called me an “oil apologist” in a recent piece. 😂
This is because I claimed that oil companies were, in fact, not “gouging” the public.
I can’t help that you can’t understand that (as of today) Exxon has a profit margin of 13% while Google has a profit margin of 23%.
I’m not an apologist, Dave.
It’s just common sense.
I mean, good grief. What does “gouging” mean anyway?
That the price of something is higher than you would prefer it?
Oil is a fungible and global commodity for crying out loud.
The hilarious part is that I wrote the piece he is referring to (Economics 101: The Price of Gas) 14 years ago!
He says that I claim, after inflation, gas prices today should be $2.64 per gallon in 2022, relative to 1950 gas prices.
No! That was as of 2008!
It’s worse today.
Adjusted for inflation from 1950, a gallon of gas today should cost right at $3.79, assuming taxes are the same.
Taking inflation and the increase in taxes into account (assuming no change in supply or demand or taxes since my first post) the same gallon of gas that cost 30 cents in 1950 should today cost about $4.48 in 2022.
But yeah, I invest in a little oil here and there too. 😉
The average profit margin of the industry does not make it a good investment though.
It’s the fact that most people can’t stomach the 50% equity drawdowns every decade.
But volatility and risk are not the same things, are they?